What is Commercial Construction? A Comprehensive Overview
Taking a deep dive into the realm of commercial construction, this blog will help you understand how this construction sector is different than the others. Commercial construction refers to the process of planning, designing, and constructing buildings or structures that are intended for business, commercial, or profit-oriented purposes.
The scope of commercial construction can vary widely, from small retail shops to large office complexes, industrial facilities, and stadiums. The construction process involves various stages, including design, permitting, site preparation, construction, inspections, and final handover.
What are the Main Types of Commercial Construction?
This portion of the article will break down the different sizes of commercial construction, their functions, and more.
Small Scale Commercial Construction
Small-scale commercial projects refer to the process of designing, planning, and constructing buildings intended for commercial use on a more localized level. This size of project typically has a lower budget, shorter construction timeline, and fewer regulatory and legal hurdles in comparison to large-scale projects. Some examples include small retail stores and complexes, service businesses, and other mixed-use developments.
Medium-Scale Commercial Construction
Medium-scale projects require a bit more planning, coordination, and resources than small-scale projects. As a result of their size, they may involve additional considerations such as specialized engineering, environmental impact assessments, and more stringent regulatory approvals. These types of buildings include larger retail stores, mid-sized office buildings, specialized healthcare facilities, and other projects that are on a more moderate scale.
Large-Scale Commercial Construction
Large-scale commercial construction requires more pre-construction planning, resources, and labor than the other project sizes. These projects most often involve substantially larger budgets, lengthier construction timelines, and a high level of complexity.
This is due to their size, scope, and often advanced technological and engineering requirements. Large-scale commercial construction management must encompass a wide range of building types and sectors, including skyscrapers, shopping malls, hotels, hospitals, and more.
Residential vs Commercial Construction?
It's important to understand commercial vs residential construction because they are two very distinct sectors with their own processes and approaches. Residential construction involves building and renovating homes, single and multi-family homes, and other types of living spaces.
These buildings are designed with a focus on providing comfort and functional living spaces for individuals and groups. They heavily emphasize comfort, aesthetics, and personalization in their planning and construction to best meet the wants and needs of homeowners.
Commercial construction focuses on function by focusing on meeting the operational needs of businesses and organizations. Some of the most important processes include collecting all the necessary zoning and permits needed for the area, ensuring that the space will be in compliance with the organization's requirements, and more.
Real-World Insights Examples of Noteworthy Commercial Construction Projects
There are several notable commercial construction projects happening all the time. Currently, California is in the process of building a new High-Speed Rail (HSR) transportation system, which is a commercial construction example. While frequently contested, it is targeted for completion in 2033. The system aims to go from San Francisco to Los Angeles at a speed of 200 miles an hour, cutting the trip time to under 3 hours.
Other prevalent commercial construction projects are the MSG Sphere in Las Vegas, which is opening in September, the Gordie Howe International Bridge, and more.
What's Involved in the Commercial Construction Process?
There are many layers and steps that need to be done in order to complete a commercial construction project. Below, we've provided a summary of the 8-step approach of how to complete a commercial construction project from the initial design to the final handover.
The first step is the conceptualization and planning of the project, by defining the purpose and goals of the project. This is when you develop a budget, ideal timeline, conduct a site analysis, and discover any challenges with the location or sustainability of the site.
The second step is the collaboration with architects and designers to develop the project's detailed plans. Integrating aesthetics, functionality, and sustainability is challenging enough, while also ensuring you can obtain necessary design approvals from both stakeholders and authorities.
Preparing and submitting permit applications is the third step before construction begins. The fourth step is general pre-construction preparations. These tasks require assembling the construction team, establishing safety protocols, and procuring materials, equipment, and resources.
Step five is preparing the foundation, which entails clearing the site, preparing it for excavation, and utility installation. Step six includes building a structural framework, installing interior systems, and finishing interior work.
Step seven covers inspections, testing, and addressing any deficiencies or issues identified during this step. The final step is finalizing and handing over the completed space. This includes completing the final touches and cosmetic work to ensure the space is ready for occupancy.
How to Secure Financing: What Are Commercial Loans?
Commercial construction loans are a type of business loan that works to help your company cover the costs that come with building or renovating that structure. You can get these types of loans from a bank, credit union, or private lender.
SBA 504 Loan
The SBA 504 Loans are set up for the acquisition and renovation of fixed assets (properties). These loans allow you to borrow a certain amount of money and pay it back over a fixed term, ranging from 10 to 25 years.
With the property most often acting as the collateral for these loans, they typically have some of the lowest interest rates. The payment rules and regulations will be unique to your loan, and they'll most likely be structured like term loans.
SBA 7(a) Loan
Another type of loan that is frequently used for construction projects is an SBA 7(a) Loan. These types of loans vary in their uses from purchasing, constructing, and renovating. However, they often exclude the majority of investment.
Some of its other uses include acquiring fixed assets, getting working capital, and purchasing land for a business. SBA 7(a) loans can have either fixed or variable interest rates depending on who you turn to when acquiring the loan. Similarly to SBA 504 loans, SBA 7(a) loans require collateral as well.
Navigating Commercial Construction Management: What Should You Know?
In commercial construction projects, good management involves the contractor coordinating stakeholders and processes. The goal is to ensure that the project is finished on time and within budget.
Clear communication from the project manager to the stakeholders and other people on site, ensures that everyone is on the same page. Stakeholders include clients, architects, designers, contractors, suppliers, and more. It's essential that all stakeholders communicate effectively by sharing information and collaborating to address issues and make informed decisions.
Another important aspect of navigating commercial construction management is documenting and reporting. Accurate and timely documentation of project progress, changes, and decisions is essential. The project manager and stakeholders ensure that records are maintained and shared appropriately.
Why is Insurance Critical in Commercial Construction?
Having commercial construction insurance is important to have on construction sites and it's especially important for commercial construction where many stakeholders are involved. Insurance helps you in protecting your business from risks that range from property damage, damage to unfinished buildings, worker injuries, and more. Insurance will typically cover general liability insurance, builder's risk insurance, worker's compensation, and commercial auto insurance.
Which Software Tools are Changing the Face of Commercial Construction?
By using new software technology it becomes possible to streamline the construction process and increase efficiency. Some of the technology that is used to help in streamlining the construction process include prefabrication, 3D printing, and more.
Prefabrication, also referred to as modular construction, is the making of buildings or sections of a building somewhere other than the project site. Prefabrication is great for quick assembly on-site without disrupting the surrounding area. This helps to streamline the process of construction while also minimizing waste and increasing the potential for quality control.
3D printing for construction allows for the creation of large-scale objects through alternative means. Commercial construction software works with 3D printing to reduce waste by only using the materials that are necessary to build the structure. The only challenge is the price of the machinery is separate.
How to Break into the Industry: Securing Commercial Construction Jobs
When considering how to get commercial construction jobs, it's important to understand the different factors considered. Factors range from technical knowledge, practical experience, and strong interpersonal skills. Having a background in construction management, or pursuing relevant degrees and certifications will help in gaining a solid foundation in commercial construction principles. It's important to understand different construction roles and their responsibilities to better understand where you fit in the process.
Who Leads the Pack? Top Commercial Construction Companies
There are many large construction companies but the top 3 leading commercial construction firms in the US include Bechtel, Fluor, and Turner Corp. Bechtel is located in Virginia and has been able to set itself apart through its history, which spans 4 generations, and the goal of protecting people and the planet through accelerated progress.
Fluor, which is located in Texas, has been in business for over 110 years. Fluor has continually topped all U.S. construction firms in the petroleum and industrial sector. Lastly, Turner Corp. which is a subsidiary of the German company Hochtief, has its headquarters located in New York City. Turner has contributed to some of the most iconic landmark projects including Madison Square Garden, Lincoln Center, and Yankee Stadium.
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